The Bankers Association expresses considerable scepticism about interfacing a new smartcard system with the places “where the customer’s means of payment lie”, which predominantly exist within banks.
Ted Woodley, of Wellington-based B&I Group is offering an electronic wallet as a key application (see Local firm avoids banks with planned smartcard).
Bankers Association chief Errol Lizamore says the system has to interface with the bank network at the points where the customer extracts money from his/her bank and where the merchant deals with the bank. Complexities with clearing funds also exist.
“Anyone who wanted to start a system like this would have to be very clear about how funds are issued,” he says.
“We had a similar set of decisions with so-called ‘white-label’ ATMs [not belonging to a particular bank],” Lizamore says. “No one’s keeping them out, but they have to interface with the rest of the ATM network.”
Told that the chief use of the smartcard system was likely to be in institutions, Lizamore conceded it may work there. There are, for example, cases of closed payment systems working on large ships. But for any closed scheme to operate independently of the banks for any length of time requires that the exercise has to be “pre-funded” by the organisation running it, in order to create value in the system in the first place.
The banks have by no means abandoned smartcards, Lizamore says, but see it as more appropriate for Mastercard and Visa to set up standards.